First Watch Restaurant Group (FWRG) AI Stock Analysis

• Market Cap: $1.02B
• Dividend Yield: N/A
• Average Volume (3M): 1.11M
• Price to Earnings (P/E): 94.0
• Beta (1Y): 0.80
• Revenue Growth: 14.43%
• EPS Growth: -53.71%
• Country: US
• Employees: 15,000
• Sector: Consumer Cyclical
• Sector Strength: 75
• Industry: Restaurants
• EPS (TTM): -0.01
• Shares Outstanding: 60,993,214
• 10 Day Avg. Volume: 1,425,938
• 30 Day Avg. Volume: 1,108,019
• PEG Ratio: -2.20
• Price to Book (P/B): 1.63
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -38.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $22.00
• Price Target Upside: 34.31% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

First Watch Restaurant Group demonstrates strong revenue growth and strategic expansions but faces challenges with high debt levels and margin pressures. The high P/E ratio suggests overvaluation concerns. While technical indicators show cautious market sentiment, the company's optimistic outlook and commitment to growth provide a positive long-term view. Overall, the stock score reflects a balanced but cautious optimism due to financial and valuation risks.

Positive Factors

Cost Environment

Commodity inflation is expected to ease, contributing to a better cost environment.

Customer Traffic

Dine-in traffic improved, indicating potential positive trends in customer visits.

Marketing Strategies

The company is expanding its marketing efforts to raise brand awareness and incentivize trial and repeat visitation.

Negative Factors

Commodity Costs

Inflation in key commodities like eggs, bacon, coffee, and avocados has pressured restaurant margins significantly.

EBITDA Outlook

The company's EBITDA outlook was significantly reduced due to cost pressures, leading to a sharp stock pullback.

New Openings

The high number of new openings over the last two quarters has created a more pronounced margin drag from new units.

First Watch Restaurant Group Business Overview & Revenue Model

Company Description

First Watch Restaurant Group, Inc. operates and franchises restaurants under the First Watch trade name. As of March 23, 2022, it operated 341 company-owned restaurants and 94 franchised restaurants in 28 states in the United States. The company was formerly known as AI Fresh Super Holdco, Inc. and changed its name to First Watch Restaurant Group, Inc. in December 2019. First Watch Restaurant Group, Inc. was founded in 1983 and is headquartered in Bradenton, Florida.

How the Company Makes Money

First Watch Restaurant Group generates revenue primarily through the sale of food and beverages at its restaurants. The company's revenue model involves both company-owned and franchised locations, allowing for a combination of direct sales and franchise fees. Key revenue streams include in-restaurant dining, takeout, and delivery services. Franchise operations contribute to earnings through initial franchise fees, ongoing royalties based on a percentage of sales, and contributions to marketing funds. The company also benefits from strategic partnerships with suppliers to optimize costs and enhance menu offerings. Additionally, First Watch capitalizes on its brand reputation and customer loyalty to drive repeat business and attract new customers.

First Watch Restaurant Group Financial Statement Overview

Summary

First Watch Restaurant Group shows strong revenue growth and improving profitability, with significant gross profit margins. The balance sheet indicates moderate leverage and stability, but there are cash flow challenges due to high capital expenditures. Overall, the company is on a positive trajectory but needs to enhance operational efficiency and manage cash flow better.

Income Statement

First Watch Restaurant Group shows strong revenue growth with a growth rate of 14.0% from 2023 to 2024. The gross profit margin improved significantly over time, reaching 78.0% in 2024. The net profit margin increased to 1.9%. However, EBIT and EBITDA margins are relatively low at 3.8% and 5.4% respectively, indicating room for operational efficiency improvements.

Balance Sheet

The company's balance sheet demonstrates moderate stability with a debt-to-equity ratio of 1.04, indicating a balanced use of debt and equity financing. Return on Equity (ROE) is modest at 3.2%, reflecting moderate profitability compared to equity. The equity ratio of 39.3% shows a solid equity base relative to total assets, although there is still significant leverage.

Cash Flow

First Watch Restaurant Group exhibits a strong operating cash flow to net income ratio of 6.11, signifying efficient cash generation from operations. However, the free cash flow is negative, indicating high capital expenditures impacting liquidity. The free cash flow to net income ratio is -0.65, suggesting potential cash flow challenges despite operational strengths.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.06B	1.02B	891.55M	730.16M	601.19M	342.39M
	Gross Profit
363.07M	792.81M	190.12M	139.53M	127.55M	29.88M
	EBIT
28.84M	38.91M	41.27M	16.91M	22.24M	-47.16M
	EBITDA
85.58M	98.38M	85.36M	54.73M	59.71M	-4.29M
	Net Income Common Stockholders
12.23M	18.93M	25.39M	6.91M	-2.11M	-49.68M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
38.85M	33.31M	49.63M	49.67M	51.86M	38.85M
	Total Assets
1.01B	1.51B	1.27B	1.10B	1.05B	1.01B
	Total Debt
637.90M	809.55M	606.97M	507.35M	473.97M	637.90M
	Net Debt
599.06M	776.24M	557.33M	457.68M	422.11M	599.06M
	Total Liabilities
686.65M	918.97M	705.76M	581.31M	542.49M	686.65M
	Stockholders Equity
320.87M	595.39M	561.28M	523.13M	504.43M	320.87M
Cash Flow		Free Cash Flow
-25.19M	-12.28M	10.65M	-393.00K	27.29M	-45.34M
	Operating Cash Flow
110.83M	115.67M	95.34M	62.94M	62.97M	-18.36M
	Investing Cash Flow
-211.26M	-206.65M	-123.37M	-63.11M	-35.68M	-26.97M
	Financing Cash Flow
75.53M	74.33M	28.07M	-2.02M	-14.27M	73.31M

First Watch Restaurant Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 16.38
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FWRG, the sentiment is Negative. The current price of 16.38 is below the 20-day moving average (MA) of 17.54, below the 50-day MA of 17.43, and below the 200-day MA of 17.80, indicating a bearish trend. The MACD of -0.39 indicates Positive momentum. The RSI at 42.49 is Neutral, neither overbought nor oversold. The STOCH value of 65.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FWRG.

First Watch Restaurant Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PTLO	77 Outperform	$968.11M	29.94	7.37%	―	4.57%	6.89%
CAKE	73 Outperform	$2.70B	17.12	46.60%	1.98%	4.42%	48.23%
BJRI	70 Neutral	$947.00M	44.82	6.01%	―	2.91%	-4.86%
CBRL	66 Neutral	$1.24B	34.66	7.80%	1.80%	2.26%	-56.99%
Sector *	62 Neutral	$6.98B	11.38	2.86%	3.90%	2.64%	-22.07%
FWRG	61 Neutral	$1.02B	94.03	1.86%	―	14.43%	-53.71%
GENK	44 Neutral	$133.17M	36.29	-1.62%	―	14.40%	-114.79%

First Watch Restaurant Group Corporate Events

First Watch Reports Q1 2025 Revenue Growth

First Watch Restaurant Group reported a 16.4% increase in total revenues for Q1 2025, despite a net loss of $0.8 million. The company opened 13 new restaurants across 10 states, bringing the total to 584 system-wide locations. Same-restaurant sales grew by 0.7%, although traffic slightly declined by 0.7%. The company updated its fiscal year 2025 guidance, projecting adjusted EBITDA between $114 million and $119 million, with plans to open 59 to 64 new restaurants. Despite macroeconomic uncertainties, First Watch remains optimistic about its growth and development pipeline.

Spark’s Take on FWRG Stock

According to Spark, TipRanks’ AI Analyst, FWRG is a Neutral.

First Watch Restaurant Group demonstrates impressive revenue growth and a robust expansion strategy, contributing positively to its stock score. The company’s strong financial performance is somewhat offset by cash flow challenges and operational efficiency needs. Technical indicators suggest cautious optimism, while the high P/E ratio points to overvaluation concerns. Despite inflationary pressures and a decline in same-restaurant sales, the earnings call projects a positive outlook, supporting the overall evaluation.

To see Spark’s full report on FWRG stock, click here.

First Watch Adopts Executive Severance Plan

On March 5, 2025, First Watch Restaurant Group, Inc. announced the adoption of an Executive Severance Plan. This plan outlines severance benefits for executive officers in cases of termination without cause or resignation for good reason, including lump sum payments based on salary and target bonuses, as well as healthcare coverage. It also includes provisions for changes in control, offering enhanced benefits if such events occur within two years of a change.

First Watch Surpasses $1 Billion in Revenue Milestone

First Watch Restaurant Group reported a significant milestone in 2024, surpassing $1 billion in total revenues and achieving over $100 million in adjusted EBITDA for the first time. Despite a decrease in income from operations and net income compared to the previous year, the company opened 50 new restaurants across 19 states, bringing the total to 572 system-wide locations. Looking forward, First Watch anticipates continued growth in 2025, with plans to open up to 64 new restaurants and achieve a 20% increase in total revenue.